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* Thought to be worth 20-30 billion yen (US$224-336 million), the order is the first Mitsubishi Heavy has received for a large-scale facility of this nature in 10 months.

Rumor (August 10, 2009):

According to Reuters, the Nikkei business daily reported that MCHC may acquire MRC for a consideration of approximately $2,100 million.

Deal Value (US$ Million) 2555.06
Deal Type                Acquisition
Sub-Category             100% Acquisition
Deal Status              Announced: 2009-11-19

Deal Participants

Target (Company)   Mitsubishi Rayon Co., Ltd.
Acquirer (Company) Mitsubishi Chemical Holdings Corporation

Deal Rationale

The acquisition will allow the MCHC Group to expand its corporate scale to better respond to an era of global competition. The MCHC Group will also acquire businesses that include the carbon fiber and composite materials businesses, for which demand is expected to expand rapidly, as well as the water treatment business. Consequently, the MCHC Group will be able to accelerate its current shift toward value businesses and anticipates synergies in carbon fiber and composite materials, water treatment and such specialty chemicals as additives and coatings. MCHC also expects to realize cost synergies through the integration of logistics, purchasing and procurement, and business bases as well as through the integration of similar functions carried out by affiliated companies. Also, the addition of MRC and its business foundations in Asia, Europe and the United States will enable the MCHC Group to further bolster and accelerate the development of its global business operations.

Through the acquisition, the company aims to shrink its commodity-grade petrochemical operations, which are facing intense competition from Middle Eastern and Chinese rivals, while embracing Mitsubishi Rayon's carbon fiber and water treatment membrane businesses.

By becoming a Mitsubishi Chemical subsidiary, Mitsubishi Rayon "aims to strengthen our business foundation, including our financial health, to drive global business expansion", president Masanao Kanbara said.

The company has become the world's top acrylic resin material producer, following the acquisition of U.K.'s Lucite International Group Ltd. in May. But the 150 billion yen purchase also put a dent in Mitsubishi Rayon's financial health.

According to Mitsubishi Chemical's announcement Thursday, its tender offer for a 100 per cent stake in Mitsubishi Rayon will run from early February until the end of March. At 380 yen (US$4.27) per share, the offering price is 40 per cent higher than Mitsubishi Rayon's closing price of 271 yen Wednesday. Any shares in Mitsubishi Rayon that Mitsubishi Chemical does not own at the close of the tender offer will be converted into Mitsubishi Chemical shares via a stock swap.

The merger of Mitsubishi Chemical and Mitsubishi Rayon will create the world's sixth-biggest comprehensive chemical firm, passing U.S. firm DuPont. The two Mitsubishi group firms' combined sales would come to around 3.5 trillion yen annually.

(Nikkei) rw